Other Considerations If The Business Is Closed Down During The Period Of The Lockdown
No work no pay
33. Whatever this is termed as (e.g. unpaid leave, temporary layoff, etc), the employer is relying on the doctrine of supervening impossibility of performance not to pay its employees during the period of the lockdown.
34. The recent publication by the Minister of Co-Operative Governance and Traditional Affairs of regulations (‘the regulations’) aimed at flattening the coronavirus curve has forbidden the continued operation of businesses not involved in the provision and supply of essential goods and services for a 21-day period from Friday 27 March 2020 to Thursday 16 April 2020 (the so-called ‘lockdown’).
35. Our viewpoint is that the promulgation of the regulations can be identified as a vis major or casus fortuitus, a natural event that was unavoidable and not reasonably foreseeable when the employer concluded various contracts of employment with its employees.
36. To the extent that the promulgation of the regulations affects performance by the employer and employee of their respective obligations in terms of the contracts of employment (as well as other contractual obligations contained, inter alia, in collective agreements), such effect would amount to a supervening impossibility for which neither the employer nor the employee is responsible and which neither could reasonably have foreseen or avoided when the contracts were entered into. Therefore, such promulgation and its effect on the performance of obligations under the various contracts of employment is a vis major or casus fortuitus, more specifically, an act of state.
37. The general principle is that a party so prevented from performing an obligation is discharged from liability, but subject to the following conditions having been met:
37.1 the impossibility of performance must have been unavoidable by taking reasonable measures to prevent it;
37.2 the performance of the obligation must have become either objectively or absolutely impossible;
37.3 the impossibility of performance of the obligation must not be self-created; and
37.4 the risk of performance becoming impossible must not have been assumed by the other party, either contractually, or by operation of law – it is advised that all the aforesaid conditions are being met during the current lockdown so prohibited by the regulations.
38. In the instance where performance is prohibited by law, the inability to perform is an instance of objective impossibility. An act of state (such as the promulgation of the regulations) is an example of such an instance (Nuclear Fuels Corporation of SA (Pty) Ltd v Orda AG 1996 (4) SA 1190 (A)).
39. In conclusion, as a result of the lockdown, both the employer and the employee are unable to perform their reciprocal contractual obligations and, provided that the employer does not require the employee to perform some type of function from home, the advice is that there is no legal obligation on the employer to pay the employee during this period.
40. However, if the employer is in a financial position to pay a portion of the remuneration that the employee would have earned during this period, this will definitely alleviate the pain and it is advisable to do so. It is important to note that it is not required that this payment (and/or benefits) should occur by means of negotiation seeing that, during the impossibility of performance period, the employees are not entitled to any payment and the employer is not entitled to any labour.
Some Job Security Issues
Misconduct
41. If the workplace is open and the employee commits misconduct, the normal misconduct principles are applicable.
42. If the employee is not required to work and commits an employment-related misconduct at home, it is advised that the normal misconduct principles are applicable.
Ill-health
43. In terms of Schedule 8: Code of Good Practice Dismissals (items 10 and 11), an employer must investigate the extent of the illness if the employee is temporarily unable to work.
44. In short, if the illness results in a prolonged absence from work, alternatives to dismissal must be considered, including, obviously, whether or not such illness is due to having contracted the coronavirus.
Operational requirements dismissals
45. It is advised that an employer is entitled to consider such dismissals, due to the impact of the coronavirus, because the considerations could be based on economic, technological, structural or similar needs of the employer.
General Important Considerations
46. As always, it is advisable to take note that the answers to the above issues are subject to the specific facts of each matter.
47. It is also advisable to take note that we are currently dealing with ‘a moving target’ in many aspects and the viewpoints expressed in this opinion may not necessarily be applicable subsequently.
And Now, Welcome To The Sukuma Relief Programme Application Centre
48. This is the application platform for financial assistance and aid for small and medium enterprises (SMEs) negatively impacted by the coronavirus.
49. The initiative is in response to the call by President Ramaphosa to all social partners to support SMEs and the Rupert family and Remgro Limited thus pledged R1 billion towards this financial aid.
Financial aid for formal sole proprietor.
50. For formal sole proprietors, a non-repayable grant of R25 000 is offered to pay for overheads and the application process is only available online.
Close corporations, companies and trusts
51. The financial aid offered is in the form of an unsecured interest bearing loan of between R250 000 and R1 million, coupled with a non-repayable grant of R25 000.
52. The loan portion will be interest free for 12 months with no repayment obligations during this period.
53. The loan is repayable after 12 months and incurs interest at the prime rate for month 13, once the business is on its feet.
54. The money can be used to cover payment, rental and other monthly operating overheads.
Documents required to participate in the relief fund
55. In essence, the following documents are required for participation in the fund:
55.1 annual financial statements for the financial period ended 28 February 2019, signed off by a professional accountant;
55.2 management accounts for the period 1 March 2019 until at least 31 December 2019;
55.3 the latest available EMP 201 document submitted to SARS, not older than three months;
55.4 three months’ bank statements of the business for the period 1 December 2019 to 29 February 2020 to assess operations before the lockdown;
55.5 a rental (premises statement) not older than three months;
55.6 the statements from all other credit agreements, such as asset finance or trade finance loan agreements, as at 31 January 2020;
55.7 motivation and supporting documentation clearly illustrating the financial distress suffered by the SME as a result of the coronavirus outbreak;
55.8 copies of identity documents of all directors, shareholders, members and trustees as applicable;
55.9 copy of marriage certificate, including ANC contract, divorce certificate or death certificate, where applicable;
55.10 copy of registration certificate;
55.11 copy of memorandum of incorporation;
55.12 copy of company’s share register; and
55.13 confirmation of bank account details issued by the relevant bank.
